Both strategic management and strategic planning are keys to business success in any industry, but few know the difference between the two. According to a 2009 Harvard Business Review article “Four Fatal Flaws of Strategic Planning,” 88 percent of companies engage in strategic planning, yet few adequately manage their strategies, and even fewer see their goals completely met. Companies must make plans and then manage their implementation. That’s the key to long-term success. Here’s how to do it.
A strategic plan usually consists of a vision and a mission statement, a financial or operational objective, an estimate of the resources required, and a summary of how the initiative fits in with the company’s overall mission. Strategic plans are what inform action. Hopefully, no company makes major decisions based on hunches or gut feelings. The most important aspect of the strategic plan is the financial/operational objective. A financial objective should be something specific, like achieving a certain cash flow, number of sales, or return on investments. Operational goals should also be objective. One example would be lowering operating expenses. Set a clear dollar amount, that way you’ll know whether you’ve met your objective or not.
Strategic management is the annual cycle of planning and implementation memorialized into an organization’s culture. Now that you’ve got a mission statement, a financial or operational objective, an estimate of the resources required, and a summary of how the initiative fits in with the company’s overall mission, you can determine whether or not your strategic plan is working through benchmarking against your KPIs or metrics.
Still, that isn’t enough. If your company is having success, wouldn’t it be nice to identify exactly why you’re having success? Strategic management can help. It allows you to recognize areas of success and sustain them while also identifying areas of weakness to improve which is done annually.
How to Manage Your Strategies
The key to managing your strategies is by setting short-term goals. Setting lots of short-term goals is the only way to gather enough data to stay on top of your strategic plan and see whether or not it’s working. Here’s a metaphor. A bat uses echolocation to determine where it is. It sends out a noise, and it measures how long the echo from that noise takes to get back. The more noises it makes, the less chance it has of flying into something. Now imagine what would happen if a bat only sent out one signal every 10 minutes? It would be flying blind, right? And that’s exactly what your company is doing if you don’t frequently create short-term goals to direct your actions.
There is one other piece to strategic management that is critical, and that is leadership and accountability. We’ve all heard the three legs of the stool of leadership – authority, responsibility, and accountability. Without all three, your plans will go nowhere.
To be successful, we must hold out leaders accountable for the plan’s execution. This should be written into performance and compensation plans. Without this critical step, how can we execute on our plans?
Organizational Change with The Change Leader
The Change Leader offers change management counseling to build high-performance cultures. We understand that strategic management is the new strategic planning, and we can help your organization steer toward success with program evaluations, change management, and leadership development. Visit our website for more information.